North Carolina Needs a Raise

President Obama’s focus on the minimum wage as a key strategy for spurring economic growth by putting money back in the pockets of working people has sparked a long-overdue national conversation about raising the minimum wage. The Justice Center’s Workers’ Rights Project[1] has released a report[2] analyzing the impact of a raise on North Carolina’s working families and the state’s still struggling economy.

North Carolina’s minimum wage tracks the federal standard of $7.25 per hour, which means that a full-time minimum wage worker earns roughly $15,080 per year. A conservative measure of actual family costs [3]for one adult and one child in North Carolina requires an income of more than twice this amount. And the price of food, gas and utilities has steadily climbed while the value of the minimum wage has not.

President Obama proposed[4] raising the minimum wage to $9.00 per hour and the Fair Minimum Wage Act of 2013[5], introduced a few weeks after the President’s State of the Union speech, calls for a raise to $10.10 per hour by 2015 (and notably also calls for a raise in the extremely low tipped minimum wage of $2.13[6]). Both proposals would affect approximately half a million workers in North Carolina. Contrary to stereotypes of minimum wage workers, the vast majority of these workers are adults over 20 years old.

And a raise would disproportionately impact women in North Carolina, who comprise more than half of minimum wage workers in the state. As this infographic[7] from the National Women’s Law Center demonstrates, women have about a 4 percent chance of becoming the CEO of a Fortune 500 company, yet have a more than 60 percent chance of being a minimum wage worker.

While increasing the minimum wage immediately benefits the lowest-paid workers through boosted earnings, it also has positive effects on the larger economy. Raising the minimum wage puts much needed earnings into the hands of those who need it most, and are most likely to spend in the local economy. The Fair Minimum Wage Act, for instance, would have a GDP impact of $1.3 billion in North Carolina, translating to a jobs impact of 5,300.

Study after study has shown that raising the minimum wage is good economic policy, even when unemployment remains high. Over the last 20 years, a robust body of research[8] has looked at employment levels before and after minimum wage increases in states, counties, and metropolitan areas and has shown that raises in the minimum wage failed to lead to job losses, even during times of high unemployment. Economists and academics agree that raising the minimum wage does not kill jobs; instead it gets the economy going.